In a report released today, Kalei Akamine from Bank of America Securities reiterated a Buy rating on Viper Energy (VNOM – Research Report), with a price target of $60.00.
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Kalei Akamine has given his Buy rating due to a combination of factors that highlight Viper Energy’s strategic growth and financial potential. The recent acquisition of royalties from Endeavor and Quinn Ranch significantly enhances Viper’s operational scale. This move increases Viper’s market capitalization beyond the $10 billion mark, positioning it favorably among mid-cap exploration and production companies and surpassing notable peers like APA, OVV, and PR.
Furthermore, the alignment with Diamondback Energy’s operations provides Viper with a stable outlook for growth, as a substantial portion of its oil production now comes from Diamondback-operated leases. This strategic alignment offers greater transparency and confidence in Viper’s capacity to sustain oil production growth by 2% annually through 2040. Additionally, the acquisitions are immediately accretive to EBITDA, with valuations becoming more favorable over time. Despite a higher-than-expected transaction cost, the expected free cash flow yield and reduced risks justify a premium yield projection, leading to the reiteration of a Buy rating.
In another report released yesterday, Truist Financial also maintained a Buy rating on the stock with a $68.00 price target.